Author: Saikishan B Rathore
3rd year student at Gujarat National Law University
I. Introduction
Google Inc. recently decided to integrate the Google Meet services with the Google Mail services. When it was brought to the notice of the Competition Commission of India (“CCI”) in Bagalekar Akash Kumar v. Google LLC., it dismissed the need for any enquiry into the abuse of dominant position by Google. It is pertinent to note that in August, 2020, CCI arrived at the same conclusion when WhatsApp Pay was integrated with the WhatsApp Chat application. The author argues that the reasoning of the CCI to identify anti-competitive conduct in digital markets cannot be sustained. Therefore, the author attempts to analyze the shortcomings of the order passed by the CCI under Section 26(2) of the Competition Act, 2002 (“the Act”).
II. Section 4, Tying-In And Dominance Per Se
According to Section 4 of the Act, dominance is not per se prohibited. The per se rule means that an arrangement or conduct is presumed to be illegal and anti-competitive and no further argument is required to justify it.[1] For instance, Section 2 of the Sherman Act makes it unlawful for an entity to monopolize, attempt to monopolize or even conspire to monopolize. Further, the ingredients to prove attempted monopolization are anticompetitive conduct, a specific intent to monopolize, and a precarious possibility of achieving such monopolistic power. In fact, even the Indian Act has incorporated the per se rule to an extent. Any agreement that falls within Section 3(3) of the Act, is per se deemed to be anti-competitive. However, a contractual tying-in agreement is not per se deemed to be anti-competitive.
Akin to Article 102 of TFEU and the EU law on abuse of dominance, Section 4 of the Act requires four ingredients to be established in such cases of technical tying-in. Firstly, the entity should be in a dominant position in the tying market. Secondly, there ought to be two different products that are tied. G-Mail and G-Meet make up the two different services that are tied up. Thirdly, the most important of all – the end consumer should be unable to attain the tying product (G-Mail) without the tied product (G-Meet). Lastly, it must lead to foreclosure of competition.
III. (Mis)Applying The Test: Introduction To ‘Nudge’ Theory In Digital Markets
In Schott Glass, the CCI was confronted with a case of product-tying. It was alleged that Schott Glass compelled the buyers to buy NGC tubes when they merely required NGA tubes by providing steep discounts as incentives. The CCI found this to be in contravention of Section 4(2)(d) as it observed that the policy of Schott Glass to market both the products jointly with common incentives “appeared to be designed with a view to protect its dominance in the upstream market.” However, the Competition Appellate Tribunal[2] set aside this decision of the CCI and ruled that there was no evidence to establish that such incentives actually perpetuated anti-competitive conduct as the consumers were still free to opt for a single product. Notwithstanding this ruling, the author argues why the same principle cannot be applied to digital markets.
The CCI noted that the users of G-Mail are not compelled to use G-Meet, and there does not appear to be any adverse consequences on the users of G-Mail for not using G-Meet, such as withdrawal of G-Mail or any other services that are being provided by Google. It was observed that a G-Mail user’s ‘free will’ can use any of the competing video-conferencing applications. However, this is not the case. The CCI in the past has enquired into the conduct of Google when it indulged in the practice of search bias. The investigation by the Directorate General had revealed that Google blends its own specialized services in its online search services that caused potential harm to the competitors, and therefore, contravened Section 4. Moreover, the CCI in its final order found Google’s conduct in contravention of Section 4 as the prominent display of the ‘Commercial Flight Unit’ with link to Google’s specialised search services amounted to an unfair imposition upon users of search services as it deprived them of additional choices. However, the deprivation of alternate choices can also come in the form of a ‘digital nudge’.
A digital nudge can be defined as any intended and goal-oriented intervention element in digital environments attempting to influence people’s judgement, choice or behaviour in a predictable way. According to Dr. Fogg’s Behaviour Model, for a nudge to be successful, the individual should be able to complete a task, should be motivated to do so, and should be triggered to initiate such behaviour. In the G-Meet case, the tied product, G-Meet is completely free of cost therefore, proving to be the ideal incentive. However, the trigger (or the intervention element) to initiate this chain is brought about by the integration of the product, thereby, ‘nudging’ the individual to use the tied product. Moreover, the timing is also pertinent to note. The need for such applications has been further accentuated due to the pandemic. Hence, there is a clear intent to monopolize by entering another relevant market and more importantly, to abuse its dominance by inducing behavioral changes in the users.
IV. Does A Simple Nudge Amount To Coercion?
In the Microsoft Windows case, it was observed that there was contractual and technical coercion when the Windows Media Player was mandatorily provided along with the Windows Operating System upon installation. It was held that for there to be coercion, there need not be any adverse consequences, the mere presence of the tied product would suffice. In 2019, the CCI ordered an enquiry against Google for mandatory installation of Google’s Mobile Services under the Mobile Application Distribution Agreement. It observed that this conduct amounts to prima facie leveraging of Google's dominance in Play Store to protect the relevant markets such as online general search in contravention of Section 4(2)(e) of the Act, among other contraventions like Section 4(2)(c) and Section 4(2)(a)(i) of the Act. Therefore, given Google’s default omnipresence in consumers’ devices, the nudge provided by integrating G-Meet is tantamount to coercion. As observed above, the present move especially amidst the ongoing pandemic clearly amounts to Google leveraging its dominance to penetrate the market of online video conferencing applications.
V. Adopting A Strict Inquisitorial Role: The Way Forward
On 4th June, the Competition Markets Authority of UK launched an investigation into Facebook’s use of advertising market data to find out whether Facebook has unfairly used the data to benefit its own services in particular Facebook Marketplace and Facebook Dating. It is to be noted that even the European Commission has launched its own investigation into Facebook’s use of data. Furthermore, the Bundeskartellamt, the competition regulator of Germany, is now examining whether the integration of the Google News Showcase service into Google’s general search function “is likely to constitute self-preferencing or an impediment to the services offered by competing third parties.” Therefore, it is essential for the CCI to play a more pro-active role by probing into the exclusionary conduct of such dominant entities which often cross the thin line between consumer welfare and anti-competitive foreclosure. The principles applying to ordinary markets can no longer be applied to digital markets as they continue to use novel methods to distort competition. In fact, as of April 2021, the Competition Markets Authority has constituted a Digital Markets Unit to investigate into anti-competitive practices of such entities.
Although the locus standi of informants has been widened owing to the Supreme Court ruling in the Cab Aggregators case, it is the quintessential obligation of the CCI to apply its mind and direct an enquiry when there is a prima facie violation. In the G-Meet case, the evidence provided by the informant (a student of law!) was found to be insufficient whereas the aforementioned developments make it clear that there seems to be a prima facie contravention by Google. Once dominance is shown in a case of tying, the dominant entity would invariably be liable for contravention for the very objective of competition law is to proscribe such activities that can cause ex post and ex ante anti-competitive effects. However, in the absence of dominance per-se and objective criteria laid down to interdict contravention of Section 4 in addition to CCI’s glaring reluctance to investigate the possible distortion of competition, ought to be nudged in the right direction.
[1] D.P. Mittal, Competition Law and Practice (3rd edn., Taxmann Publications Private Limited 2011) 172. [2] Schott Glass India Pvt. Ltd. v CCI 2014 SCC OnLine Comp AT 3.